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It Costs Money to Wag the Tail of the Dog!

April 1, 2016

A mainstay of our meetings with Hill staff is our explanation of why FDA’s budgetary needs continue to grow each year. We cite three primary areas: impact of new legislation; increasing scientific complexity; and the continuing trend to globalized markets in FDA-regulated products. Most staffers write this down. Hopefully, at some later date, they look at their notes and think about what is involved in “being FDA” and how resources are needed and consumed in fulfilling its broad public mission.

As it’s now a couple of years since Congress passed a major, sweeping FDA bill, we suspect that staffers tend to discount the impact of new legislation. To counter this, we point out that FDA legislation tends to have a “long tail” of commitments. For examples, we point to two, not-so-recent FDA laws.

In 2010, Congress passed the Biological Price Competition and Innovations Act as part of, but separate from, the Affordable Care Act. That’s why I know it is exactly 6 years since it was enacted. What’s happened since? FDA has been carefully and thoughtfully building the regulatory framework for an entirely new drug approval pathway! It has not been a small job, either by degree of challenge or volume of issues to address. At the same time, multiple companies have been eager to enter the biosimilars workstream of FDA. At this point, FDA is working with sponsors on nearly 60 separate applications that are in different stages of development.

It is no wonder that Dr. Woodcock used biosimilars as an example of where more monies need to flow. Congress provided a user fee to cover approximately half the costs, but has never really appropriated funds for the other half. FDA has been funding the program out of savings and efficiencies it was able to glean elsewhere in its budget. However, the pending workload for FY 17 is large and the available dollars quite small — despite the law having passed 6 years ago.

Another example of the “long tail” of financial commitments is the Food Safety Modernization Act. Passed in 2011, its goal is the transformation of food safety protection from reactive to proactive action. Congress has provided funding for this each year — more some years than others — but has never caught up with the projected costs determined at enactment by the Congressional Budget Office. Like biosimilars, FDA has had to develop an entirely new approach that didn’t exist beforehand, while working with all the stakeholders to be sure that the result was fair, practical, and economical. FSMA may be 5 years old, but it is still very much a work in progress and in need of increased funding.

While explaining FDA’s funding needs, if you are asked, “What new laws?” remember to mention the long tail of financial commitments. For FDA, “new laws” encompasses legislation passed even 6 years ago.

Note: This week’s Analysis and Commentary was written by Steven Grossman, the deputy executive director of the Alliance for a Stronger FDA.

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